Chap_01 - Chapter 1 Thinking Like an Economist Purpose:...

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Chapter 1 Thinking Like an Economist Purpose: This chapter serves as an introduction to the entire text. After capturing the students’ interest, it introduces the notion of scarcity, the benefit-cost principle, and opportunity cost. It moves on to discuss four common pitfalls that surround choice making and resource allocation. The chapter closes by describing the special features of the text. A brief overview of the coming chapters is provided. Length: 19 pages Time required to read: One to 1½ hours. Students who work the exercises will require additional time. Number of lectures required for understanding: One full lecture. Some of this chapter's material may be used in the opening lecture of the term. In that case, a second lecture period, or a part of one, will be needed. Summary: The chapter opens with a comparison between large classes and small classes. The large class offers impersonal and sometimes mediocre instruction but the cost per pupil is low. The small class offers high-quality instruction but the cost per pupil is very high. The reader is asked to contemplate comparisons and selections based on Beginning the Term or Semester This chapter is an introduction to the subject. In your first lecture, you will provide students with the mechanics of your class and probably some materials from this chapter. Coming back to the same materials after the students have read Chapter 1 is always a good idea. Repeating the lessons and concepts helps provide a firm basis for future study. It is impossible to determine how much time will be required to get through the class mechanics plus the concepts in the chapter. Two lecture periods will likely be needed.
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class size and cost per pupil. This example provides an introduction to economic problems, economic reasoning, and choice. Scarcity is defined and elaborated and the benefit-cost principle is offered as a means of assisting in decisions. A hypothetical problem asks the student to choose between a computer game for $25 at a store close to campus or the same game for $15 in a downtown store. Variations of this problem are used several times in the chapter. Economic surplus and opportunity cost are defined and the authors list four “pitfalls” to making economic decisions: 1. Measuring costs and benefits as proportions rather than as quantities 2. Ignoring opportunity costs 3. Failure to ignore sunk costs 4. Failure to understand the average-marginal distinction These pitfalls are stated and restated before the authors move on to the distinction between micro and macro, the plan of the book, and an explanation of “economic naturalism” as that feature is used throughout the book. Outline: 1. Introduction 2. Economics: Studying Choice in a World of Scarcity 3. Applying the Cost-Benefit Principle a. Economic Surplus b. Opportunity Cost c. The Role of Economic Models 4. Recap 5. Four Important Decision Pitfalls a. Measuring Costs and Benefits as Proportions Rather than Absolute Dollar Amounts
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This note was uploaded on 03/30/2008 for the course ECON 002 taught by Professor Mcleod,markpehlivan,ayseozg during the Summer '08 term at Pennsylvania State University, University Park.

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Chap_01 - Chapter 1 Thinking Like an Economist Purpose:...

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